10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQuarterly Report Under Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2012

or

o Transition Report Under Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the Transition Period from ------------to------------

Commission File Number 000-25919

American Church Mortgage Company

(Exact name of registrant as specified in its charter)

Minnesota	41-1793975
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10237 Yellow Circle Drive Minnetonka, MN	55343
(Address of principal executive offices)	(Zip Code)

(952) 945-9455

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at November 14, 2012
Common Stock, $0.01 par value per share	1,698,098 shares

AMERICAN CHURCH MORTGAGE COMPANY
INDEX
	Page No.
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements:
Balance Sheets		2 - 3
Statements of Operations		4 - 5
Statements of Cash Flows		6 - 7
Notes to Financial Statements		8 - 19
Item 2.  Management’s Discussion and Analysis of Financial
Condition and Results of Operations		20 – 26
Items 4.  Controls and Procedures		27
PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings		27
Item 1A.  Risk Factors		27
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3.  Defaults Upon Senior Securities		28
Item 4.  Mine Safety Disclosures		28
Item 5.  Other Information...............................................................................		28
Item 6.  Exhibits		28
Signatures		29

AMERICAN CHURCH MORTGAGE COMPANY

Minnetonka, Minnesota

Financial Statements

September 30, 2012

1

AMERICAN CHURCH MORTGAGE COMPANY
Balance Sheets
ASSETS		September 30, 2012		December 31, 2011
		(Unaudited)
Current Assets
Cash and equivalents	$	196,486	$	611,991
Accounts receivable		177,765		133,683
Interest receivable		140,449		135,990
Current maturities of mortgage loans receivable, net of
allowance of $60,356 and $22,381 and deferred
origination fees of $76,832 and $26,687 at September
30, 2012 and December 31, 2011, respectively		2,157,524		773,416
Current maturities of bond portfolio		1,135,000		873,000
Prepaid expenses		8,878		26,432
Total current assets		3,816,102		2,554,512
Mortgage Loans Receivable, net of current maturities,
allowance of $753,936 and $790,428 and deferred
origination fees of $487,537 and $508,693 at September 30,
2012 and December 31, 2011, respectively		27,422,891		27,748,418
Bond Portfolio, net of current maturities		7,800,482		9,123,923
Real Estate Held for Sale		713,497		714,322
Deferred Offering Costs,
net of accumulated amortization of $912,765 and $822,664
at September 30, 2012 and December 31, 2011, respectively		836,667		854,814
Total Assets	$	40,589,639	$	40,995,989
Notes to Unaudited Financial Statements are an integral part of this Statement.

2

AMERICAN CHURCH MORTGAGE COMPANY
Balance Sheets
LIABILITIES AND STOCKHOLDERS’ EQUITY		September 30, 2012			December 31, 2011
		(Unaudited)
Current Liabilities
Current maturities of secured investor certificates	$	1,587,000		$	1,257,000
Accounts payable		108,241			21,200
Dividends payable		170,310			160,057
Total current liabilities		1,865,551			1,438,257
Deposit on real estate held for sale		57,600			57,600
Secured Investor Certificates, Series B, net of current maturities		17,039,000			17,594,000
Secured Investor Certificates, Series C		7,932,000			6,691,000
Total liabilities		26,894,151			25,780,857
Stockholders’ Equity
Common stock, par value $.01 per share
Authorized, 30,000,000 shares
Issued and outstanding, 1,703,098 shares at
September 30, 2012 and 1,778,411 at December 31, 2011		17,031			17,784
Additional paid-in capital		19,214,405			19,514,904
Accumulated deficit		(5,535,948	)		(4,317,556	)
Total stockholders’ equity		13,695,488			15,215,132
Total liabilities and stockholders' equity	$	40,589,639		$	40,995,989
Notes to Unaudited Financial Statements are an integral part of this Statement.

3

AMERICAN CHURCH MORTGAGE COMPANY
Statements of Operations
	For the Nine Months Ended
	September 30, 2012			September 30, 2011
	(Unaudited)			(Unaudited)
Interest and Other Income	$	2,329,385		$	2,423,237
Interest Expense		1,418,291			1,377,281
Net Interest Income		911,094			1,045,956
Provision for losses on mortgage loans receivable		140,394			142,899
Provision for losses on bonds		1,000,000			100,000
Provision for Losses on Mortgage Loans Receivable and Bonds		1,140,394			242,899
Net Interest (Loss) Income after Provision for Mortgage and Bond Losses		(229,300	)		803,057
Operating Expenses		555,315			600,058
Operating (Loss) Income		(784,615	)		202,999
Other Income		1,479			11,896
Net (Loss) Income	$	(783,136	)	$	214,895
Basic and Diluted (Loss) Income Per Share	$	(0.44	)	$	0.11
Dividends Declared Per Share	$	0.25		$	0.29
Weighted Average Common Shares Outstanding -
Basic and Diluted		1,763,182			1,930,523
Notes to Unaudited Financial Statements are an integral part of these Statements.

4

AMERICAN CHURCH MORTGAGE COMPANY
Statements of Operations
	For the Three Months Ended
	September 30, 2012			September 30, 2011
	(Unaudited)			(Unaudited)
Interest and Other Income	$	777,699		$	803,856
Interest Expense		482,956			463,320
Net Interest Income		294,743			340,536
(Recovery of ) provision for losses on mortgage loans receivable		(69,832	)		55,955
Provision for losses on bonds		500,000			—
Provision for Losses on Mortgage Loans Receivable and Bonds		430,168			55,955
Net Interest (Loss) Income after Provision for Mortgage and Bond Losses		(135,425	)		284,581
Operating Expenses		151,949			221,667
Operating (Loss) Income		(287,374	)		62,914
Other Income		380			10,855
Net (Loss) Income	$	(286,994	)	$	73,769
Basic and Diluted (Loss) Income Per Share	$	(0.16	)	$	0.04
Dividends Declared Per Share	$	0.10		$	0.09
Weighted Average Common Shares Outstanding -
Basic and Diluted		1,749,509			1,908,999
Notes to Unaudited Financial Statements are an integral part of these Statements.

5

AMERICAN CHURCH MORTGAGE COMPANY
Statements of Cash Flows
	For the Nine Months Ended
	September 30, 2012			September 30, 2011
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net (loss) income	$	(783,136	)	$	214,895
Adjustments to reconcile net (loss) income to net cash
from operating activities:
Impairment on real estate held for sale		—			57,820
Provision for losses on mortgage loans receivable		140,394			142,899
Provision for losses on bonds		1,000,000			100,000
Amortization of loan origination discounts		(25,761	)		(15,425	)
Amortization of deferred costs		90,101			87,791
Change in assets and liabilities
Accounts receivable		(44,082	)		(26,430	)
Interest receivable		(4,459	)		4,278
Prepaid expenses		(5,706	)		(4,320	)
Accounts payable		4,201			222,675
Management fee payable		32,840			(22,357	)
Net cash provided by operating activities		404,392			761,826
Cash Flows from Investing Activities
Origination of mortgage loans		(1,574,019	)		(40,922	)
Proceeds from origination fees		—			14,700
Collections of mortgage loans		474,890			896,567
Investment in bonds		(40,000	)		(31,046	)
Proceeds from bonds		101,441			54,543
Net cash (used for) provided by investing activities		(1,037,688	)		893,842
Cash Flows from Financing Activities
Payments on line of credit, net		—			(616,000	)
Proceeds from secured investor certificates		1,250,000			925,000
Payments on secured investor certificate maturities		(234,000	)		(189,000	)
Payments for deferred costs		(71,954	)		(87,541	)
Stock redemptions		(301,252	)		(442,482	)
Dividends paid		(425,003	)		(621,185	)
Net cash provided by (used for) financing activities		217,791			(1,031,208	)
Net Increase in Cash and Equivalents		(415,505	)		624,460
Cash and Equivalents - Beginning		611,991			350,339
Cash and Equivalents - Ending	$	196,486		$	974,799
Notes to Unaudited Financial Statements are an integral part of these Statements.

6

AMERICAN CHURCH MORTGAGE COMPANY
Statements of Cash Flows - Continued
	For the Nine Months Ended
	September 30, 2012		September 30, 2011
	(Unaudited)		(Unaudited)
Supplemental Cash Flow Information
Dividends payable	$	170,310	$	163,283
Mortgage loans receivable reclassified to
real estate held for resale	$	—	$	144,666
Loan Origination Fees	$	109,500	$	—
Interest paid	$	1,418,291	$	1,289,490
Secured investor certificates issued
through the stock exchange program	$	—	$	18,000
Stock purchased through stock repurchase program		75,313 shares		—
Notes to Unaudited Financial Statements are an integral part of this Statement.

7

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions for interim statements and, therefore, do not include all information and disclosures necessary for fair presentation of results of operations, financial position, and changes in cash flow in conformity with generally accepted accounting principles. However, in the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for fair presentation of financial position, results of operations, and cash flows for the period presented.

The unaudited financial statements of the Company should be read in conjunction with the December 31, 2011 audited financial statements included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2011. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Nature of Business

American Church Mortgage Company, a Minnesota corporation, was incorporated on May 27, 1994. The Company was organized to engage primarily in the business of making mortgage loans to churches and other nonprofit religious organizations throughout the United States, on terms established for individual organizations.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The most sensitive estimates relate to the realizability of the mortgage loans receivable, the valuation of the bond portfolio and real estate held for sale. It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any, may be material to the financial statements.

Concentration of Credit Risk

The Company's loans have been granted to churches and other non-profit religious organizations. The ability of the Company’s debtors to honor their contracts is dependent on member contributions and the involvement in the church or organization of its senior pastor.

8

Cash and Equivalents

The Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.

The Company maintains accounts primarily at two financial institutions. At times throughout the year, the Company’s cash and equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation. Cash in money market funds is not federally insured. The Company had approximately $3,000 and $0 in money market fund accounts at September 30, 2012 and December 31, 2011, respectively. The Company has not experienced any losses in such accounts.

Bond Portfolio

The Company accounts for the bond portfolio under the Accounting Standards Codification (ASC) 320 Investments-Debt and Equity Securities. The Company classifies the bond portfolio as “available-for-sale” and measures the portfolio at fair value. While the bonds are generally held until contractual maturity, the Company classifies them as available-for-sale as the bonds may be used to repay secured investor certificates or provide additional liquidity or working capital in the short term. The Company has classified $1,135,000 and $873,000 in bonds as current assets as of September 30, 2012 and December 31, 2011, respectively, based on management’s estimates for liquidity requirements and contractual maturities of certain bonds maturing in 2012 and 2011, respectively.

Allowance for Mortgage Loans Receivable

The Company records mortgage loans receivable at estimated net realizable value, which is the unpaid principal balances of the mortgage loans receivable, less the allowance for mortgage loans. The Company’s loan loss policy provides an allowance for estimated uncollectible loans based on an evaluation of the current status of the loan portfolio. This policy reserves for principal amounts outstanding on a particular loan if cumulative interruptions occur in the normal payment schedule of a loan; therefore, the Company recognizes a provision for losses and an allowance for the outstanding principal amount of a loan in the Company’s portfolio if the amount is in doubt of collection. Additionally, no additional interest income is recognized on impaired loans that are declared to be in default and are in the foreclosure process. At September 30, 2012, the Company reserved $814,292 for fourteen mortgage loans, of which seven are three or more mortgage payments in arrears. At December 31, 2011, the Company reserved $812,809 for fifteen mortgage loans, of which eight were three or more mortgage payments in arrears. One of the loans was in the foreclosure process.

9

A summary of transactions in the allowance for credit losses for the nine months ended September 30, 2012 is as follows:

Balance at December 31, 2011	$	812,809
Provision for additional losses		140,394
Charge-offs		(138,911	)
Balance at September 30, 2012	$	814,292

The total impaired loans, which are loans that are in the foreclosure process or are declared to be in default, were approximately $944,000 and $1,563,000 at September 30, 2012 and December 31, 2011, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance for mortgage loans. These loans are currently recorded on a non-accrual basis.

The Company recently established a formal policy in which it will declare a loan to be in default whereupon the loan will be placed on non-accrual status when the following thresholds have been met: (i) the borrower has missed three consecutive mortgage payments; (ii) the borrower has not communicated to the Company any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments; (iii) lines of communication to the borrower have broken down such that any reasonable prospect of rehabilitating the loan and return of regular payments is gone.

The Company recently established a policy in which it will accept payments received on non-accrual loans as well as a policy for resuming accrual of interest on loans that have been placed on non-accrual status. These policies are as follows: (i) The Company will accept payments on loans that are currently on non-accrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation. (ii) A letter outlining the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the Senior Pastor and all board members of the borrower. This letter resumes the obligation to make payments on non-accrual loans. (iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from non-accrual status.

The Company recently established the following policy for determining when an uncollectable loan or trade receivable is charged off. When a loan is declared in default by its policy or deemed to be doubtful of collection, the loan committee of the Advisor to the Company will direct the staff to charge-off the uncollectable receivables.

Loans totaling approximately $2,208,000 and $3,137,000 exceeded 90 days past due but continued to accrue interest as of September 30, 2012 and December 31, 2011, respectively. The Company believes that continued interest accruals are appropriate because the loans are well secured, not deemed to be in default and the Company is actively pursuing collection of past due payments.

10

Real Estate Held for Sale

The Company records real estate held for sale at the estimated fair value, which is net of the expected expenses related to the sale of the real estate. The Company maintains continuous efforts to dispose of real estate held for sale at market terms, including purchase price and financing terms. The Company may allow for temporary occupancy of real estate held for sale. Revenues, including temporary rental payments, and expenses, such as taxes and insurance, arising from real estate held for sale are recorded on the Statement of Operations in the current period.

Carrying Value of Long-Lived Assets

The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that the carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of the estimated useful life.

Recoverability is assessed based on the carrying amount of the asset compared to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An allowance for losses is recognized when the carrying amount is deemed not recoverable and exceeds fair value as determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values, and third party independent appraisals.

Revenue Recognition

Interest income on mortgage loans receivable and the bond portfolio is recognized as earned. Other income included with interest represents cash received for loan origination fees, which are recognized over the life of the loan as an adjustment to the yield on the loan.

Deferred Financing Costs

The Company defers the costs related to obtaining financing, principally through the issuance of Secured Investor Certificates. These costs are amortized over the life of the financing using the straight line method, which approximates the effective interest method.

Income Per Common Share

No adjustments were made to income for the purpose of calculating earnings per share, as there were no potential dilutive shares outstanding.

11

Reclassifications

Certain accounts in the prior year financial statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements. These reclassifications had no effect on net income (loss).

2. FAIR VALUE MEASUREMENTS

The Company measures certain financial instruments at fair value in our balance sheets. The fair value of these instruments is based on valuations that include inputs that can be classified within one of the three levels of a hierarchy. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.

Except for the bond portfolio, which is required by authoritative accounting guidance to be recorded at fair value on our Balance Sheets, the Company elected not to record any other financial assets or liabilities at fair value on a recurring basis. We recorded additional provisions for losses on our St. Agnes and Agape bonds (Note 3), which totaled $1,000,000 and $100,000 for the three and nine months ended September 30, 2012 and September 30, 2011, respectively. Total allowance for losses on our bond portfolio equaled $2,000,000 and $1,000,000 at September 30, 2012 and December 31, 2011, respectively.

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring basis:

				Fair Value Measurement
September 30, 2012		Fair Value		Level 3
Bond portfolio	$	8,935,482	$	8,935,482

				Fair Value Measurement
December 31, 2011		Fair Value		Level 3
Bond portfolio	$	9,996,923	$	9,996,923

We determine the fair value of the bond portfolio shown in the table above by comparing it with similar instruments in inactive markets. The analysis reflects the contractual terms of the bonds, which are callable at par by the issuer at any time, and the anticipated cash flows of the bonds, and uses observable and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for valuation.

12

The change in Level 3 assets measured at fair value on a recurring basis is summarized as follows:

		Bond Portfolio
Balance at December 31, 2011	$	9,996,923
Purchases		40,000
Allowances for losses		(1,000,000	)
Proceeds		(101,441	)
Balance at September 30, 2012	$	8,935,482

Real estate held for sale and impaired loans are recorded at fair value on a nonrecurring basis. The fair value of real estate held for sale was based upon the listed sales price less expected selling costs, which is a Level 2 input. There were no provisions for losses on real estate held for sale for the three and nine months ended September 30, 2012 and 2011. The fair value of impaired loans was based upon the Company’s loan loss policy, which is Level 3 input. The Company reserved an additional provision of $236,039 and $142,899 for loan losses at September 30, 2012 and 2011, respectively.

The following table summarizes the Company’s financial instruments that were measured at fair value on a nonrecurring basis:

	September 30, 2012
	Level 1		Level 2		Level 3		Fair Value at September 30, 2012
Impaired Loans	$	—	$	—	$	592,577	$	592,577
Real estate held for resale		—		713,497		—		713,497
	$	—	$	713,497	$	592,577	$	1,306,074

	December 31, 2011
	Level 1		Level 2		Level 3		Fair Value at December 31, 2011
Impaired Loans	$	—	$	—	$	1,188,050	$	1,188,050
Real estate held for resale		—		714,322		—		714,322
	$	—	$	714,322	$	1,188,050	$	1,902,372

The change in Level 2 and Level 3 assets measured at fair value on a nonrecurring basis is summarized as follows:

13

		Fair Value Measurement Level 3			Fair Value Measurement Level 2
		Impaired Loans			Real Estate Held for Sale
Balance at December 31, 2011	$	1,188,050		$	714,322
Additions/Acquisitions		—			379,355
Dispositions/Proceeds		(384,576	)		(380,180	)
Provision for other than temporary losses		(210,897	)		—
Balance at September 30, 2012	$	592,577		$	713,497

3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO

At September 30, 2012, the Company had mortgage loans receivable totaling $30,959,076. The loans bear interest ranging from 1.00% to 10.25% with a weighted average of approximately 8.47% at September 30, 2012. The Company had mortgage loans receivable totaling $29,870,023 that bore interest ranging from 1.00% to 10.25% with a weighted average of approximately 8.40% at December 31, 2011.

The Company has a portfolio of secured church bonds at September 30, 2012 and December 31, 2011, which are carried at fair value. The bonds pay either semi-annual or quarterly interest ranging from 5.25% to 10.40%. The aggregate value of secured church bonds equaled approximately $10,935,000 at September 30, 2012 with a weighted average interest rate of 7.92% and approximately $10,997,000 at December 31, 2011 with a weighted average interest rate of 7.92%. These bonds are due at various maturity dates through July 2039.

The contractual maturity schedule for mortgage loans receivable and the bond portfolio as of September 30, 2012, is as follows:

	Mortgage Loans	Bond Portfolio
October 1, 2012 through September 30, 2013	$     2,294,712	$    1,134,000
October 1, 2013 through December 31, 2013	417,206	262,000
2014	1,755,704	676,000
2015	934,075	146,000
2016	1,042,144	122,500
Thereafter	24,515,235	8,594,982
	30,959,076	10,935,482
Less loan loss and bond loss allowances	(814,292)	(2,000,000)
Less deferred origination income	(564,369)	______-__
Totals	$29,580,415	$ 8,935,482

14

The Company currently owns $2,035,000 First Mortgage Bonds issued by St. Agnes Missionary Baptist Church located in Houston, Texas. The total principal amount of First Mortgage Bonds issued by St. Agnes is $13,375,000. St. Agnes defaulted on its payment obligations to bondholders in June 2007. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the three properties that secure the First Mortgage Bonds in November 2007, which was dismissed in September 2008, and the church was subsequently foreclosed upon. The Company, along with all other bondholders, has a superior lien over all other creditors. No accrual for interest receivable from the First Mortgage Bonds is recorded by the Company. The Company has an aggregate allowance for losses of $1,800,000 and $800,000 for the First Mortgage Bonds at September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management believes will be recovered. In March 2009, a lease was signed with St. Agnes to permit it to remain in the property while submitting lease payments to bondholders as partial interest payments. Lease payments began in the second quarter of 2009, however St. Agnes failed to make all required lease payments and was evicted from the property in the first quarter of 2010. The trustee has sold one of the properties. The trustee has not provided details of the sale to bondholders as of September 30, 2012.

The Company currently owns $637,000 First Mortgage Bonds and $497,000 Second Mortgage Bonds issued by Agape Assembly Baptist Church located in Orlando, Florida. The total principal amount of First Mortgage Bonds issued by Agape is $7,200,000, and the total principal amount of Second Mortgage Bonds issued is $715,000. Agape defaulted on its payment obligations to bondholders in September 2010. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. Agape is currently performing under a loan modification agreement. The trustee is collecting weekly sinking fund payments from the Church, however this has not yet resulted in any disbursements to bondholders as of September 30, 2012. The trustee is working toward a resolution with the Church which should result in payment of both interest and principal to bondholders in the first quarter of 2013. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an aggregate allowance for losses of $200,000 for the First and Second Mortgage Bonds at September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management believes will be recovered.

On July 12, 2012, the Company completed the sale of a property held for sale. The purchase price of the property was $475,000. The purchaser provided a $20,000 cash down payment. The Company provided a $500,000 loan to the qualified church to purchase the property which is located in Baton Rouge, Louisiana. The terms of the loan were consistent with market terms for such financing. This property was acquired by the Company through foreclosure. The Company took possession of the property in March 2012. The Company recorded a gain of $95,645 in connection with this transaction. This amount has been recorded as a reduction of the provision for losses on mortgage loans receivable.

4. SECURED INVESTOR CERTIFICATES

Secured investor certificates are collateralized by certain mortgage loans receivable or secured church bonds of approximately the same value as the certificates. The weighted average interest rate on the

15

certificates was 6.65% at September 30, 2012 and December 31, 2011, respectively. Holders of the secured investor certificates may renew certificates at the current rates and terms upon maturity at the Company’s discretion. Renewals upon maturity are considered neither proceeds from nor issuance of secured investor certificates. Renewals totaled approximately $308,000 and $676,000 for the nine months ended September 30, 2012 and 2011, respectively. The secured investor certificates have certain financial and non-financial covenants identified in the respective series’ trust indentures.

The estimated maturity schedule for the secured investor certificates at September 30, 2012 is as follows:

October 1, 2012 through September 30, 2013	$     1,587,000
October 1, 2013 through December 31, 2013	271,000
2014	1,876,000
2015	2,568,000
2016	3,146,000
Thereafter	17,110,000
Totals	$26,558,000

In October 2008, the Company filed a registration statement with the Securities and Exchange Commission to offer $20,000,000 worth of Series C secured investor certificates. The offering was declared effective by the SEC on March 30, 2009 and was amended in January 2010 and again in June 2011. The offering concluded March 30, 2012. The certificates were offered in multiples of $1,000 with interest rates ranging from 4.50% to 7.25%, subject to changing market rates, and maturities from 4 to 7 and 13 to 20 years. The certificates are collateralized by certain mortgage loans receivable and church bonds of approximately the same value. At September 30, 2012, approximately 7,932 Series C certificates had been issued and were outstanding for $7,932,000, of which 2,586 Series C certificates were issued through its stock repurchase program (see Note 5).

5. STOCK EXCHANGE AND REPURCHASE PROGRAMS

The Company commenced a stock exchange program effective February 2, 2010 whereby it offered to shareholders on an ongoing basis (until terminated or modified by the Board of Directors) an exchange of one $1,000 principal amount Series C secured investor certificate for 200 shares of common stock of the Company, and, with respect to odd-lot holders above 200 shares converted into certificates, the sum of $5.00 cash for each remaining share. This exchange ratio was determined by management and approved by the Board of Directors, and was established as a basis for the completion of the exchange offer. This ratio was not intended to represent the amount at which the Company or any other party would be expected to purchase common stock in an arm’s-length transaction. The Company’s Board of Directors approved up to 1,000,000 shares to be repurchased. As of September 30, 2012, requests representing approximately 532,743 shares have been submitted for share exchanges. The Company did not exchange any shares during the three or nine months ended September 30, 2012. The Company exchanged 528,974 shares during the year ended December 31, 2011 for 2,586 Series C certificates ($2,586,000 in principal amount) and paid $76,870 in cash for remainder shares. The program was

16

terminated by the Board of Directors on April 12, 2012 since the Company terminated the Series C secured investor certificate offering. (See Note 4).

The Company commenced a share repurchase plan on July 19, 2011 whereby it offers to shareholders on an ongoing, first-come, first-served basis (until terminated or modified by the Board of Directors) the repurchase of an aggregate of up to 250,000 shares of common stock at $4.00 per share. Shares may be purchased at the sole discretion of the Company, subject to the funds available after meeting Company obligations. Shareholders must present for repurchase either: (i) a minimum of 500 Shares, or (ii) the total number of Shares registered in such Shareholder’s name. The Company repurchased 75,313 shares for $301,252 during the nine months ended September 30, 2012. As of December 31, 2011, the Company had repurchased an aggregate of 160,927 shares for $643,229 in cash under the program. The Program may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders.

6. TRANSACTIONS WITH AFFILIATES

The Company has an Advisory Agreement with Church Loan Advisors, Inc. (the “Advisor”). The Advisor is responsible for the day-to-day operations of the Company and provides office space and administrative services. The Advisor and the Company are related through common ownership and common management. A majority of the independent board members approve the advisory agreement on an annual basis. The Company paid the Advisor management and origination fees of approximately $153,000 and $101,000 during the three months ended September 30, 2012 and 2011, respectively, and $350,000 and $320,000 during the nine months ended September 30, 2012 and 2011, respectively.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company is required to disclose the fair value information about financial instruments, where it is practicable to estimate that value. Because assumptions used in these valuation techniques are inherently subjective in nature, the estimated fair values cannot always be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument.

The fair value estimates presented herein are based on relevant information available to management as of September 30, 2012 and December 31, 2011, respectively. Management is not aware of any factors that would significantly affect these estimated fair value amounts. As these reporting requirements exclude certain financial instruments and all non-financial instruments, the aggregate fair value amounts presented herein do not represent management’s estimate of the underlying value of the Company.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are as follows:

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	September 30, 2012		December 31, 2011
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash and equivalents	$     196,486	$     196,486	$      611,911	$      611,911
Accounts receivable	177,765	177,765	133,683	133,683
Interest receivable	140,449	140,449	135,990	135,990
Mortgage loans receivable	30,959,076	39,809,789	29,870,023	36,100,291
Bond portfolio	8,935,482	8,935,482	10,996,923	10,996,923
Secured investor certificates	26,558,000	30,017,000	25,542,000	30,374,749

The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value:

Cash and equivalents

Due to their short-term nature, the carrying amount of cash and cash equivalents approximates fair value.

Accounts receivable

The carrying amount of accounts receivable approximates fair value.

Interest receivable

The carrying amount of interest receivable approximates fair value.

Mortgage loans receivable

The fair value of the mortgage loans receivable is currently more than the carrying value as the portfolio is currently yielding a higher rate than similar mortgages with similar terms for borrowers with similar credit quality. The credit markets in which we conduct business have experienced a decrease in interest rates resulting in the fair value of the mortgage loans increasing during the three or nine months ended September 30, 2012 and 2011, respectively.

Bond portfolio

We determine the fair value of the bond portfolio shown in the table above by comparing with similar instruments in inactive markets. The analysis reflects the contractual terms of the bonds, which are callable at par by the issuer at any time, and the anticipated cash flows of the bonds and uses observable and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for valuation.

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Secured investor certificates

The fair value of the secured investor certificates is currently greater than the carrying value due to higher interest rates than current market rates.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this section and elsewhere in this Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, (i) trends affecting our financial condition or results of operations; (ii) our business and growth strategies; (iii) the mortgage loan industry and the financial status of religious organizations; (iv) our financing plans; and other risks detailed in the Company’s other periodic reports filed with the Securities and Exchange Commission. The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance.

A detailed statement of risks and uncertainties is contained in our reports to the SEC, including, in particular, our Annual Report on Form 10-K for the year ended December 31, 2011 and other public filings and disclosures.  Investors and shareholders are urged to read these documents carefully.

Plan of Operation

We were founded in May 1994 and commenced active business operations on April 15, 1996 after the completion of our initial public offering.

We currently have seventy first mortgage loans aggregating $30,944,395 in principal amount and one second mortgage loan totaling $14,681 in principal amount and a first mortgage bond portfolio with par values aggregating $10,935,482. Although due to recent economic factors the Company has not made significant new investments in its principal form of assets funding of additional first mortgage loans and purchase of first mortgage bonds issued by churches is expected to resume as more investable assets become available through: (i) future sales of securities; (ii) prepayment and repayment at maturity of existing loans and bonds; and (iii) borrowed funds. These capital sources and interest received on loans and bonds provide general working capital to the Company.

We have completed public offerings of common stock and debt securities. In October 2008, we filed a registration statement with the Securities and Exchange Commission for a public offering of $20,000,000 worth of Series C Secured Investor Certificates. The Series C Secured Investor Certificates were offered in multiples of $1,000 at interest rates ranging from 4.50% to 7.25%, subject to changing market rates, and maturities from 4 to 7 and 13 to 20 years. The offering was declared effective by the Securities and Exchange Commission on March 30, 2009 and was amended in January 2010 and again in June 2011. The offering concluded March 30, 2012. At September 30, 2012, approximately 7,932 Series C certificates had been issued and were outstanding with a balance of $7,932,000 of which 2,586 Series C certificates were issued in connection with our stock repurchase program.

Results of Operations

Fiscal 2012 Nine Months Compared to Fiscal 2011 Nine Months

The Company had a net loss for the nine months ended September 30, 2012 of approximately ($783,000) and net income for the nine months ended September 30, 2011 of approximately $215,000.

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The Company had total interest and other income of approximately $2,329,000 and $2,423,000, for the nine months ended September 30, 2012 and 2011, respectively. Interest and other income is comprised of interest from loans, interest from bonds, amortization of bond discounts and amortization of loan origination fees. As of September 30, 2012, the Company’s loans receivable have interest rates ranging from 1.00% to 10.25%, with an average, principal-adjusted interest rate of 8.47%. The Company’s bond portfolio has an average current yield of 7.90% as of September 30, 2012. As of September 30, 2011, the average, principal-adjusted interest rate on the Company’s portfolio of loans was 8.25% and the Company’s portfolio of bonds had an average current yield of 7.90%. The decrease in interest income was due to the scheduled repayment of mortgage loans and the maturation and sale of some of the bonds in our portfolio.

Interest expense was approximately $1,418,291 and $1,377,281 for the nine months ended September 30, 2012 and 2011, respectively. The increase in interest expense was due to the sale of additional Secured Investor Certificates which occurred prior to the termination of the Series C Secured Investor Certificate offering as of March 30, 2012. Net interest margin decreased from 43.16% to 39.11% resulting primarily from a decline in interest and other income of approximately 4.00% compared to an increase in interest expense of 3.00%.

We continually assess our loan portfolio and reserve for potential losses based on the payment history, status of loans and market conditions. Due to changing economic conditions and the current status of, and trends in, our loan portfolio, which has seen a rise in both past due loans and loans in the foreclosure process during the past several years, we made changes to our loan policy in fiscal 2010 to permit us to accelerate the recording of provisions when amounts become past due. We continue to monitor the policy in light of changing economic conditions. In addition, we have written off accrued interest on certain loans as a result of these changes. These changes to our loan loss policy have increased the amount of reserves against potential loan losses and our expense of past due amounts that are deemed doubtful of collection.

Provision for losses on mortgage loans receivable increased for the nine months ended September 30, 2012 as we recorded additional provision against the mortgage loans. We recorded an additional provision for losses on loans during the nine months ended September 30, 2012 of approximately $140,000 compared to approximately $143,000 for the nine months ended September 30, 2011. At September 30, 2012, we reserved approximately $814,000 for fourteen mortgage loans, of which seven are three or more mortgage payments in arrears. At December 31, 2011, we reserved approximately $813,000 for fifteen mortgage loans, of which eight were three or more mortgage payments in arrears. One loan was in the foreclosure process.

Our lending practices limit deployment of our capital to churches and other non-profit religious organizations. The total principal amount of our second mortgage loans is limited to 20% of our average invested assets. We currently have one second mortgage loan of approximately $15,000 in principal amount outstanding. We do not loan to any borrower who has been in operation for less than two years and the borrower must demonstrate they can service the debt outstanding for the prior three years based on historical financial statements. We do not lend money based on projections or pledge programs. The loan amount to any borrower cannot exceed 75% loan to appraised value. Typically, we do not lend over 70% loan to value except in extenuating circumstances. In addition, the borrower’s long-term debt (including the proposed loan) cannot exceed four times the borrower’s gross income for the previous twelve month period.

Historically, loans in our portfolio are outstanding for an average of five and a half years. Our borrowers are typically small independent churches with little or no borrowing history. Once a church establishes a payment history with us, they look to refinance their loan with a local bank, credit union or other financial

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institution which is willing to provide financing since the borrower has established a payment history and have demonstrated they can meet their mortgage debt obligations.

Operating expenses for the nine months ended September 30, 2011 decreased to approximately $645,000 compared to $688,000 at September 30, 2011. The decrease is the result of a reduction in real estate impairment reserves.

Fiscal 2012 Third Quarter Compared to Fiscal 2011 Third Quarter

The Company had a net loss of approximately ($287,000) for the three months ended September 30, 2012 and had net income of approximately $74,000 for the three months ended September 30, 2011, on total interest and other income of approximately $778,000 and $804,000, respectively. Interest expense was approximately $483,000 and $463,000 for the three months ended September 30, 2012 and 2011, respectively. The decrease in net interest income was approximately $75,000. In addition, the Company experienced an increase in provisions for losses on its bond portfolio of approximately $500,000 for the three month period ended September 30, 2012.

Operating expenses for the three months ended September 30, 2012 decreased to approximately $152,000 compared to $222,000 at September 30, 2011. The decrease in operating expenses is due to reduction in real estate impairment reserves for the three month period ended September 30, 2012.

Mortgage Loans and Bond Portfolio

No mortgage loans were paid in full during the nine months ended September 30, 2012. Two new loans were funded during the nine months ended September 30, 2012. One loan was for $500,000 which is located in Baton Rouge, Louisiana. The second loan is a $1,620,000 loan located in Chicago, Illinois. Both are first mortgage loans.

The Company currently owns $2,035,000 First Mortgage Bonds issued by St. Agnes Missionary Baptist Church located in Houston, Texas. The total principal amount of First Mortgage Bonds issued by St. Agnes is $13,375,000. St. Agnes defaulted on its payment obligations to bondholders in June 2007. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the three properties that secure the First Mortgage Bonds in November 2007, which was dismissed in September 2008, and the church was subsequently foreclosed upon. The Company, along with all other bondholders, has a superior lien over all other creditors. No accrual for interest receivable from the First Mortgage Bonds is recorded by the Company. The Company has an aggregate allowance for losses of $1,800,000 and $800,000 for the First Mortgage Bonds at September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management believes will be recovered. In March 2009, a lease was signed with St. Agnes to permit it to remain in the property while submitting lease payments to bondholders as partial interest payments. Lease payments began in the second quarter of 2009, however St. Agnes failed to make all required lease payments and was evicted from the property in the first quarter of 2010. The trustee has sold one of the properties. The trustee has not provided details of the sale to bondholders as of September 30, 2012.

The Company currently owns $637,000 First Mortgage Bonds and $497,000 Second Mortgage Bonds issued by Agape Assembly Baptist Church located in Orlando, Florida. The total principal amount of First Mortgage Bonds issued by Agape is $7,200,000, and the total principal amount of Second Mortgage Bonds issued is $715,000. Agape defaulted on its payment obligations to bondholders in September 2010. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. Agape is currently performing under a loan modification agreement. The trustee is collecting weekly sinking fund payments

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from the Church, however this has not yet resulted in any disbursements to bondholders as of September 31, 2012. The trustee is working toward a resolution with the Church which should result in payments of both interest and principal to resume to bondholders which is anticipated to begin during the first quarter of 2013. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an aggregate allowance for losses of $200,000 for the First and Second Mortgage Bonds during the periods ended September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management believes will be recovered.

New Policies

We recently established a formal policy in which we will declare a loan to be in default whereupon the loan will be placed on non-accrual status when the following thresholds have been met:

i) The borrower has missed three consecutive mortgage payments;

ii) The borrower has not communicated to the Company any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments;

iii) Lines of communication to the borrower have broken down (i.e. phone calls not returned, returned certified mail) such that any reasonable prospect of rehabilitating the loan and return of regular payments is gone.

We recently established a policy in which we will accept payments received on nonaccrual loans as well as a policy for resuming accrual of interest on loans that have been placed on non-accrual status. These policies are as follows:

i) We will accept payments on loans that are currently on nonaccrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation.

ii) A letter outlining the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the Senior Pastor and all board members of the church (borrower). This letter resumes the obligation to make payments on non-accrual loans.

iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from non-accrual status.

We recently established the following policy for determining when an uncollectable loan or trade receivable is charged off:

When a loan is declared in default by our policy or deemed to be doubtful of collection, the loan committee of the Advisor to the Company will direct the staff to write-off the uncollectable receivables. Details of the Advisory agreement can be found on page 8 in the Form 10-K for the year ended December 31, 2011.

Real Estate Held for Sale

All assets held by us are secured, directly or indirectly, by either a first or second mortgage on the underlying property to serve as collateral. Acquisition of a property through foreclosure or other means will always be a remedial step in protecting the Company’s assets. We will always market foreclosed property that we acquire as available for sale and will carry such properties on our balance sheet as real

23

estate available for sale until the property is sold. Our acquisition and ownership of real estate is not a line of business or business objective and is only the result of foreclosure of underlying mortgages. The fair value of real estate held for sale is based upon the listed sales price less excepted selling costs. The fair value of real estate held for sale was approximately $713,000 and $714,000 as of September 30, 2012 and December 31, 2011, respectively.

Dividends

We have elected to operate as a real estate investment trust (REIT), therefore we are required, among other things, to distribute to shareholders at least 90% of “Taxable Income” in order to maintain our REIT status. The dividends declared and paid to shareholders may include cash from origination fees even though they are not recognized as income in their entirety for the period under generally accepted accounting principles in the United States. We did not earn any origination fees for the nine months ended September 30, 2012 and 2011, respectively.

We paid a dividend of $.09 for each share held of record on January 25, 2012. The dividend, which was paid January 30, 2012, represents a 3.60% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

Our Board of Directors declared a dividend of $.09 for each share held of record on April 25, 2012. The dividend, which was paid April 30, 2012, represents a 3.60% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

Our Board of Directors declared a dividend of $.06 for each share held of record on July 26, 2012. The dividend, which was paid July 31, 2012, represents a 2.40% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

Our Board of Directors declared a dividend of $.10 for each share held of record on October 26, 2012. The dividend, which was paid October 31, 2012, represents a 4.00% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

Liquidity and Capital Resources

We generate revenue through implementation of our business plan of making mortgage loans to, and acquiring first mortgage bonds issued by, churches and other non-profit religious organizations. Our revenue is derived principally from interest income, and secondarily through the origination fees and renewal fees generated by the mortgage loans we make. We also earn income through interest on funds that are invested pending their use in funding mortgage loans and on income generated on church bonds. Our principal recurring expenses are advisory fees, legal fees, accounting fees and interest payments on secured investor certificates. Our liabilities at September 30, 2012 are primarily comprised of dividends declared as of September 30, 2012 but not yet paid and our Secured Investor Certificates.

Our current capital is fully deployed into loans and first mortgage church bonds. Our current funding sources are expected to provide adequate cash for our operations for the next twelve months. Future capital needs are expected to be met by: (i) the additional sale of securities; (ii) prepayment and repayment at maturity of mortgage loans we make; (iii) borrowed funds; and (iv) bonds that mature or we sell from our bond portfolio. We believe that the “rolling” effect of mortgage loans maturing and bond repayments will provide a supplemental source of capital to fund our business operations in future years. Nevertheless, we believe that it may be desirable, if not necessary, to sell additional securities in order to

24

enhance our capacity to make mortgage loans on a continuous basis. There can be no assurance we will be able to raise additional capital on terms acceptable for such purposes.

In October 2008, we filed with the Securities and Exchange Commission a registration statement to offer $20,000,000 worth of Series C Secured Investor Certificates to qualified investors. The offering was declared effective by the Securities and Exchange Commission on March 30, 2009 and was amended in January 2010 and again in June 2011. The offering was concluded March 30, 2012. These certificates provided a source of capital to fund additional loans to qualified borrowers, pay down existing maturing certificates and to pay off our line of credit. At September 30, 2012, approximately $7,932,000 had been collected from the issuance of 7,932 Series C certificates.

The Company commenced a stock repurchase program effective February 2, 2010 whereby it offered to shareholders on an ongoing basis (until terminated or modified by the Board of Directors) an exchange of one $1,000 principal amount Series C secured investor certificate for 200 shares of common stock of the Company, and, with respect to odd-lot holders above 200 shares converted into certificates, the sum of $5.00 cash for each remaining share. This exchange ratio was determined by management and approved by the Board of Directors, and was established as a basis for the completion of the exchange offer. This ratio was not intended to represent the amount at which the Company or any other party would be expected to purchase common stock in an arm’s-length transaction. The Company’s Board of Directors approved up to 1,000,000 shares to be repurchased. As of September 30, 2012, requests representing an aggregate of approximately 532,743 shares were submitted for share exchanges. The Company did not exchange any shares during the nine months ended September 30, 2012. The Company exchanged 528,974 shares during the year ended December 31, 2011 for 2,586 Series C certificates ($2,586,000 in principal amount) and paid $76,810 in cash for remainder shares. The program was terminated by the Board of Directors on April 12, 2012 because the Company did not renew the Series C Secured Investor Certificate offering.

The Company commenced a share repurchase plan on July 19, 2011 whereby it offers to shareholders on an ongoing, first-come, first-served basis (until terminated or modified by the Board of Directors): the repurchase of an aggregate of up to 250,000 shares of common stock at $4.00 per share. Shares may be purchased at the sole discretion of the Company, subject to the funds available after meeting Company obligations. Shareholders must present for repurchase either: (i) a minimum of 500 Shares, or (ii) the total number of Shares registered in such Shareholder’s name. The Company repurchased 75,313 shares for $301,252 during the nine months ended September 30, 2012. As of December 31, 2011, the Company had repurchased 160,927 shares for $643,229 in cash. The Program may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders.

During the nine months ended September 30, 2012, total assets decreased by approximately $406,000 due to an increase on our bond portfolio. Current liabilities increased by approximately $91,000 for the nine months ended September 30, 2012 due to an increase in our current maturities of secured investor certificates outstanding. Non-current liabilities increased by approximately $1,113,000 for the nine months ended September 30, 2012 due to the sale of secured investor certificates from our series C certificate offering prior to the termination of the offering.

For the nine months ended September 30, 2012, net cash provided by operating activities decreased to approximately $404,000 from $762,000 from the comparative period ended September 30, 2011, primarily due to an increase in reserves on our bond portfolio.

For the nine months ended September 30, 2012, net cash (used for) investing activities was approximately $(1,038,000) compared to cash provided by investing activities of approximately $894,000 from the comparative nine months ended September 30, 2011, due to an increase in origination of mortgage loans.

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For the nine months ended September 30, 2012, net cash provided by (used for) financing activities increased to approximately $218,000 from ($1,031,000) for the comparative nine months ended September 30, 2011, primarily due to an increase in proceeds from Secured Investor Certificate sales.

Critical Accounting Estimates

Preparation of our financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. We evaluate these estimates based on assumptions we believe to be reasonable under the circumstances.

The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The most sensitive estimates relate to the realizability of the mortgage loans receivable and the valuation of the bond portfolio and real estate held for sale. It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any, may be material to the financial statements.

We estimate the value of real estate we hold pending re-sale based on a number of factors. We look at the current condition of the property as well as current market conditions in determining a fair value, which will determine the listing price of each property. Each property is valued based on its current listing price less any anticipated selling costs, including for example, realtor commissions. Since churches are single use facilities the listing price of the property may be lower than the total amount owed to us. Attorney fees, taxes, utilities along with real estate commission fees will also reduce the amount we collect from the sale of a property we have acquired through foreclosure. The fair value of the real estate held for sale includes estimates of expenses related to the sale of the real estate.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Items 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the principal executive officer and the principal accounting officer, of the effectiveness of the Company’s disclosure controls and procedures as of the end of the quarter ended September 30, 2012. Based on that evaluation, the principal executive officer and the principal accounting officer concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Securities and Exchange Commission is recorded, processed, summarized and

26

reported within the time periods specified in Securities and Exchange Commission rules and forms and that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal accounting officer, to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

As of the end of the quarter ended September 30, 2012, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1.  Legal Proceedings.

None.

Item 1A.  Risk Factors.

Not applicable.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Not Applicable

(b) Not Applicable

(c) Issuer Exchange and Purchases of Equity Securities

The Company commenced a share repurchase plan on July 19, 2011 whereby it offers to shareholders on an ongoing, first-come, first-served basis (until terminated or modified by the Board of Directors) the repurchase of an aggregate of up to 250,000 shares of common stock at $4.00 per share. Shares may be purchased at the sole discretion of the Company, subject to the funds available after meeting Company obligations. Shareholders must present for repurchase either: (i) a minimum of 500 Shares, or (ii) the total number of Shares registered in such Shareholder’s name. The Company repurchased 60,450 shares for $241,800 during the three months ended September 30, 2012. The repurchase plan may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders. The chart below provides further information with respect to shares repurchased under this plan during the three months ended September 30, 2012.

Period	Total Number of Shares Repurchased	Average Price Paid Per Share	Total Number of Shares repurchased as Part of Publicly Announced Plan	Maximum Number of Shares that May Yet Be repurchased Under the Plan
July 1, 2012 to July 30, 2012	0	$4.00	0	74,210
August 1, 2012 to August 31, 2012	38,050	$4.00	38,050	36,160

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September 1, 2012 to September 30, 2012	22,400	$4.00	22,400	36,160
Totals:	60,450		60,450

Item 3. Defaults Upon Senior Securities. 

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit

Number Title of Document

31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the of the Sarbanes-Oxley Act of 2002.

32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the of the Sarbanes-Oxley Act of 2002.

101* The following financial information from our Quarterly Report on Form 10Q for the third quarter of fiscal year 2012 filed with the Securities and Exchange Commission on November 15, 2012, is formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at September 30, 2012 and December 31, 2012; (ii) Consolidated Statements of Operations for the nine months and three months ended September 30, 2012 and 2011; (iii) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011; and (iv) the Notes to Financial Statements (Unaudited).

* The XBRL related information in Exhibit 101 to this Quarterly Report on Form 10Q shall not be deemed “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, additionally the data shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under theses sections.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 14, 2012

	AMERICAN CHURCH MORTGAGE COMPANY
By:	/s/ Philip J. Myers
	Philip J. Myers
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Scott J. Marquis
	Scott J. Marquis
	Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)

29

EX-31.1

Exhibit 31.1

OFFICER'S CERTIFICATE

PURSUANT TO SECTION 302

I, Philip J. Myers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Church Mortgage Company.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-5(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2012	By: /s/ Philip J. Myers
	Philip J. Myers
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

OFFICER'S CERTIFICATE

PURSUANT TO SECTION 302

I, Scott J. Marquis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Church Mortgage Company.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-5(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2012	By: /s/ Scott J. Marquis
	Scott J. Marquis
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Church Mortgage Company (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: November 14, 2012	By: /s/ Philip J. Myers
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Church Mortgage Company (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: November 14, 2012	By: /s/ Scott J. Marquis
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

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Fair Value Of Financial Instruments - Carrying Amount & Fair Value Financial Instruments (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Interest receivable	$ 140,449	$ 135,990
Carrying Value Disclosure
Cash and equivalents	196,486	611,911
Accounts receivable	177,765	133,683
Interest receivable	140,449	135,990
Mortgage loans receivable	30,959,076	29,870,023
Bond portfolio	8,935,482	10,996,923
Secured investor certificates	26,558,000	30,017,000
Fair Value Disclosure
Cash and equivalents	196,486	611,911
Accounts receivable	177,765	133,683
Interest receivable	140,449	135,990
Mortgage loans receivable	39,809,789	36,100,291
Bond portfolio	8,935,482	10,996,923
Secured investor certificates	$ 30,137,819	$ 30,374,749

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Fair Value Measurements - Fair Value Measurement period increase decrease (Details) (USD $)			9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Fair Value Measurement Level 3	Sep. 30, 2012 Fair Value Measurement Level 2
Balance at December 31, 2011	$ 1,306,074	$ 1,902,372	$ 1,188,050	$ 714,322
Additions/Acquisitions				379,355
Dispositions/Proceeds			(384,576)	(380,180)
Provision for other than temporary losses			(210,897)
Balance at September 30, 2012	$ 1,306,074	$ 1,902,372	$ 592,577	$ 713,497

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Mortgage Loans Receivable and Bond Portfolio

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Mortgage Loans Receivable and Bond Portfolio

3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO

At September 30, 2012, the Company had mortgage loans receivable totaling $30,959,076. The loans bear interest ranging from 1.00% to 10.25% with a weighted average of approximately 8.47% at September 30, 2012. The Company had mortgage loans receivable totaling $29,870,023 that bore interest ranging from 1.00% to 10.25% with a weighted average of approximately 8.40% at December 31, 2011.

The Company has a portfolio of secured church bonds at September 30, 2012 and December 31, 2011, which are carried at fair value. The bonds pay either semi-annual or quarterly interest ranging from 5.25% to 10.40%. The aggregate value of secured church bonds equaled approximately $10,935,000 at September 30, 2012 with a weighted average interest rate of 7.92% and approximately $10,997,000 at December 31, 2011 with a weighted average interest rate of 7.92%. These bonds are due at various maturity dates through July 2039.

The contractual maturity schedule for mortgage loans receivable and the bond portfolio as of September 30, 2012, is as follows:

	Mortgage Loans	Bond Portfolio
October 1, 2012 through September 30, 2013	$     2,294,712	$    1,134,000
October 1, 2013 through December 31, 2013	417,206	262,000
2014	1,755,704	676,000
2015	934,075	146,000
2016	1,042,144	122,500
Thereafter	24,515,235	8,594,982
	30,959,076	10,935,482
Less loan loss and bond loss allowances	(814,292)	(2,000,000)
Less deferred origination income	(564,369)	______-__
Totals	$29,580,415	$ 8,935,482

The Company currently owns $2,035,000 First Mortgage Bonds issued by St. Agnes Missionary Baptist Church located in Houston, Texas. The total principal amount of First Mortgage Bonds issued by St. Agnes is $13,375,000. St. Agnes defaulted on its payment obligations to bondholders in June 2007. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the three properties that secure the First Mortgage Bonds in November 2007, which was dismissed in September 2008, and the church was subsequently foreclosed upon. The Company, along with all other bondholders, has a superior lien over all other creditors. No accrual for interest receivable from the First Mortgage Bonds is recorded by the Company. The Company has an aggregate allowance for losses of $1,800,000 and $800,000 for the First Mortgage Bonds at September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management believes will be recovered. In March 2009, a lease was signed with St. Agnes to permit it to remain in the property while submitting lease payments to bondholders as partial interest payments. Lease payments began in the second quarter of 2009, however St. Agnes failed to make all required lease payments and was evicted from the property in the first quarter of 2010. The trustee has sold one of the properties. The trustee has not provided details of the sale to bondholders as of September 30, 2012.

The Company currently owns $637,000 First Mortgage Bonds and $497,000 Second Mortgage Bonds issued by Agape Assembly Baptist Church located in Orlando, Florida. The total principal amount of First Mortgage Bonds issued by Agape is $7,200,000, and the total principal amount of Second Mortgage Bonds issued is $715,000. Agape defaulted on its payment obligations to bondholders in September 2010. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. Agape is currently performing under a loan modification agreement. The trustee is collecting weekly sinking fund payments from the Church, however this has not yet resulted in any disbursements to bondholders as of September 30, 2012. The trustee is working toward a resolution with the Church which should result in payment of both interest and principal to bondholders in the first quarter of 2013. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an aggregate allowance for losses of $200,000 for the First and Second Mortgage Bonds at September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management believes will be recovered.

On July 12, 2012, the Company completed the sale of a property held for sale. The purchase price of the property was $475,000. The purchaser provided a $20,000 cash down payment. The Company provided a $500,000 loan to the qualified church to purchase the property which is located in Baton Rouge, Louisiana. The terms of the loan were consistent with market terms for such financing. This property was acquired by the Company through foreclosure, and the Company took possession of the property in March 2012. The Company recorded a gain of $95,645 in connection with this transaction. This amount has been recorded as a reduction of the provision for losses on mortgage loans receivable.

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Secured Investor Certificates - Secured Investor Certificates Maturity Schedule (Details) (Secured Investor Certificates, USD $)	3 Months Ended	12 Months Ended				183 Months Ended
	Dec. 31, 2013	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2013	Mar. 31, 2032
Secured Investor Certificates
Secured Investor Certificate Maturity Schedule	$ 271,000	$ 3,146,000	$ 2,568,000	$ 1,876,000	$ 1,587,000	$ 17,110,000

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Mortgage Loans Receivable and Bond Portfolio (Details Narrative) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
Mortgage Loans Receivable Gross	$ 28,991,234	$ 29,870,023
Church Bond Owned Gross	10,948,000	10,997,000
St. Agnes Bond Owned Gross	2,035,000
St. Agnes Bond Gross	13,375,000
Bond Reserve Fund	1,300,000
Agape Global First Mortgage Bond	637,000
Agape Globarl Second Mortgage Bond	497,000
Agape Global First Mortgage Bond Gross	7,200,000
Agape Global Second Mortgage Bonds Gross	715,000
Agape Bond Reserve	200,000
Purchase Price Real Estate Held for Sale	475,000
Down Payment	20,000
Mortgage Loan Amount	500,000
Recorded Gain on Sale	$ 95,645

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Secured Investor Certificates (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2009
Notes to Financial Statements
Secured Investor Certificates Renewed	$ 308,000	$ 676,000
Secured Investor Cerrtificates Series C Offering			20,000,000
Secured Investor Certificates Minimum Amount	1,000
Secured Investor Certificates Series C Issued	7,932
Secured Investor Certificates Series C Value	7,932,000
Certificates Issued Stock Repurchase Program	$ 2,586

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Stock Exchange and Repurchase Programs (Details Narrative) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
Certificate Amount Received for Shares	$ 1,000
Shares Minimum Number to Exchange	200
Cash For Odd Lot Shares	5
Maximum Shares for Exchange Program	1,000,000
Number of Shares Exchanged		532,743
Number of Certificates Issued Stock Repurchase Program		2,586
Number of Certificates Issued Stock Repurchase Program Value		2,586,000
Cash for Odd Lots Shares Total		76,870
Maximum Number of Shares Stock Repurchase Program	250,000
Cash Amount for Shares Repurchase Program	4
Minimum Shares for Stock Repurchase Program	500
Total Shares Repurchased	14,863	160,927
Total Cash Paid for Share Repurchase Program	$ 59,453	$ 643,229

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

2. FAIR VALUE MEASUREMENTS

The Company measures certain financial instruments at fair value in our balance sheets. The fair value of these instruments is based on valuations that include inputs that can be classified within one of the three levels of a hierarchy. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.

Except for the bond portfolio, which is required by authoritative accounting guidance to be recorded at fair value on our Balance Sheets, the Company elected not to record any other financial assets or liabilities at fair value on a recurring basis. We recorded additional provisions for losses on our St. Agnes and Agape bonds (Note 3), which totaled $1,000,000 and $100,000 for the three and nine months ended September 30, 2012 and September 30, 2011, respectively. Total allowance for losses on our bond portfolio equaled $2,000,000 and $1,000,000 at September 30, 2012 and December 31, 2011, respectively.

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring basis:

				Fair Value Measurement
September 30, 2012		Fair Value		Level 3
Bond portfolio	$	8,935,482	$	8,935,482

				Fair Value Measurement
December 31, 2011		Fair Value		Level 3
Bond portfolio	$	9,996,923	$	9,996,923

We determine the fair value of the bond portfolio shown in the table above by comparing it with similar instruments in inactive markets. The analysis reflects the contractual terms of the bonds, which are callable at par by the issuer at any time, and the anticipated cash flows of the bonds, and uses observable and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for valuation.

The change in Level 3 assets measured at fair value on a recurring basis is summarized as follows:

		Bond Portfolio
Balance at December 31, 2011	$	9,996,923
Purchases		40,000
Allowances for losses		(1,000,000	)
Proceeds		(101,441	)
Balance at September 30, 2012	$	8,935,482

Real estate held for sale and impaired loans are recorded at fair value on a nonrecurring basis. The fair value of real estate held for sale was based upon the listed sales price less expected selling costs, which is a Level 2 input. There were no provisions for losses on real estate held for sale for the three and nine months ended September 30, 2012 and 2011. The fair value of impaired loans was based upon the Company’s loan loss policy, which is Level 3 input. The Company reserved an additional provision of $236,039 and $142,899 for loan losses at September 30, 2012 and 2011, respectively.

The following table summarizes the Company’s financial instruments that were measured at fair value on a nonrecurring basis:

	September 30, 2012
	Level 1		Level 2		Level 3		Fair Value at September 30, 2012
Impaired Loans	$	—	$	—	$	592,577	$	592,577
Real estate held for resale		—		713,497		—		713,497
	$	—	$	713,497	$	592,577	$	1,306,074

	December 31, 2011
	Level 1		Level 2		Level 3		Fair Value at December 31, 2011
Impaired Loans	$	—	$	—	$	1,188,050	$	1,188,050
Real estate held for resale		—		714,322		—		714,322
	$	—	$	714,322	$	1,188,050	$	1,902,372

The change in Level 2 and Level 3 assets measured at fair value on a nonrecurring basis is summarized as follows:

		Fair Value Measurement Level 3			Fair Value Measurement Level 2
		Impaired Loans			Real Estate Held for Sale
Balance at December 31, 2011	$	1,188,050		$	714,322
Additions/Acquisitions		—			379,355
Dispositions/Proceeds		(384,576	)		(380,180	)
Provision for other than temporary losses		(210,897	)		—
Balance at September 30, 2012	$	592,577		$	713,497

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Transactions With Affiliates (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Managment Fee	$ 153,000	$ 101,000	$ 350,000	$ 320,000

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Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current Assets
Cash and equivalents	$ 196,486	$ 611,991
Accounts receivable	177,765	133,683
Interest receivable	140,449	135,990
Current maturities of mortgage loans receivable, net of allowance of $60,356 and $22,381 and deferred origination fees of $76,832 and $26,687 at September 30, 2012 and December 31, 2011, respectively	2,157,524	773,416
Current maturities of bond portfolio, at fair value	1,135,000	873,000
Prepaid expenses	8,878	26,432
Total current assets	3,816,102	2,554,512
Mortgage Loans Receivable, net of current maturities, allowance of$753,936 and $790,428 and deferred origination fess of $487,537 and $508,693 at September 30, 2012 and December 31, 2011, respectively	27,422,891	27,748,418
Bond Portfolio, at fair value, net of current maturities	7,800,482	9,123,923
Real Estate Held for Sale	713,497	714,322
Deferred Offering Costs, net of accumulated amortization of $912,765 and $822,664 at September 30, 2012 and December 31, 2011, respectively	836,667	854,814
Total Assets	40,589,639	40,995,989
Current Liabilities
Current maturities of secured investor certificates	1,587,000	1,257,000
Accounts payable	108,241	21,200
Dividends payable	170,310	160,057
Total current liabilities	1,865,551	1,438,257
Deposit on real estate held for sale	57,600	57,600
Secured Investor Certificates, Series B, net of current maturities	17,039,000	17,594,000
Secured Investor Certificates, Series C	7,932,000	6,691,000
Total liabilities	26,894,151	25,780,857
Stockholders' Equity
Common stock, par value $.01 per share, Authorized, 30,000,000 shares, Issued and outstanding, 1,703,098 shares at September 30, 2012 and 1,778,411 at December 31, 2011	17,031	17,784
Additional paid-in capital	19,214,405	19,514,904
Accumulated deficit	(5,535,948)	(4,317,556)
Total stockholders' equity	13,695,488	15,215,132
Total Liabilities and Stockholders' Equity	$ 40,589,639	$ 40,995,989

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Statements of Cash Flows (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Statement of Cash Flows [Abstract]
Dividends payable	$ 107,310	$ 163,283
Mortgage loans receivable reclassified to real estate held for sale		144,666
Loan origination fees	109,500
Interest paid	1,418,291	1,289,490
Secured investor certificates issued through the stock exchange program		$ 18,000
Stock purchased through stock repurchase program	75,313

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Fair Value Measurements - Fair Value Measurement Bond Portfolio (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Gross Bond portfolio	$ 8,935,482	$ 9,996,923
Fair Value Measurement Level 3
Gross Bond portfolio	$ 8,935,482	$ 9,996,923

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Fair Value Measurements - Impaired Loans and Real Estate Held For Sale (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Impaired Loans	$ 592,577	$ 1,188,050
Real estate held for resale	713,497	714,322
Total Fair Value Measurement	1,306,074	1,902,372
Fair Value Measurement Level 1
Impaired Loans
Real estate held for resale
Fair Value Measurement Level 2
Impaired Loans
Real estate held for resale	713,497	714,322
Total Fair Value Measurement	713,497	714,322
Fair Value Measurement Level 3
Impaired Loans	592,577	1,188,050
Real estate held for resale
Total Fair Value Measurement	$ 592,577	$ 1,188,050

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions for interim statements and, therefore, do not include all information and disclosures necessary for fair presentation of results of operations, financial position, and changes in cash flow in conformity with generally accepted accounting principles. However, in the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for fair presentation of financial position, results of operations, and cash flows for the period presented.

The unaudited financial statements of the Company should be read in conjunction with the December 31, 2011 audited financial statements included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2011. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Nature of Business

American Church Mortgage Company, a Minnesota corporation, was incorporated on May 27, 1994. The Company was organized to engage primarily in the business of making mortgage loans to churches and other nonprofit religious organizations throughout the United States, on terms established for individual organizations.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The most sensitive estimates relate to the realizability of the mortgage loans receivable, the valuation of the bond portfolio and real estate held for sale. It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any, may be material to the financial statements.

Concentration of Credit Risk

The Company's loans have been granted to churches and other non-profit religious organizations. The ability of the Company’s debtors to honor their contracts is dependent on member contributions and the involvement in the church or organization of its senior pastor.

Cash and Equivalents

The Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.

The Company maintains accounts primarily at two financial institutions. At times throughout the year, the Company’s cash and equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation. Cash in money market funds is not federally insured. The Company had approximately $3,000 and $0 in money market fund accounts at September 30, 2012 and December 31, 2011, respectively. The Company has not experienced any losses in such accounts.

Bond Portfolio

The Company accounts for the bond portfolio under the Accounting Standards Codification (ASC) 320 Investments-Debt and Equity Securities. The Company classifies the bond portfolio as “available-for-sale” and measures the portfolio at fair value. While the bonds are generally held until contractual maturity, the Company classifies them as available-for-sale as the bonds may be used to repay secured investor certificates or provide additional liquidity or working capital in the short term. The Company has classified $1,135,000 and $873,000 in bonds as current assets as of September 30, 2012 and December 31, 2011, respectively, based on management’s estimates for liquidity requirements and contractual maturities of certain bonds maturing in 2012 and 2011, respectively.

Allowance for Mortgage Loans Receivable

The Company records mortgage loans receivable at estimated net realizable value, which is the unpaid principal balances of the mortgage loans receivable, less the allowance for mortgage loans. The Company’s loan loss policy provides an allowance for estimated uncollectible loans based on an evaluation of the current status of the loan portfolio. This policy reserves for principal amounts outstanding on a particular loan if cumulative interruptions occur in the normal payment schedule of a loan; therefore, the Company recognizes a provision for losses and an allowance for the outstanding principal amount of a loan in the Company’s portfolio if the amount is in doubt of collection. Additionally, no additional interest income is recognized on impaired loans that are declared to be in default and are in the foreclosure process. At September 30, 2012, the Company reserved $814,292 for fourteen mortgage loans, of which seven are three or more mortgage payments in arrears. At December 31, 2011, the Company reserved $812,809 for fifteen mortgage loans, of which eight were three or more mortgage payments in arrears. One of the loans was in the foreclosure process.

A summary of transactions in the allowance for credit losses for the nine months ended September 30, 2012 is as follows:

Balance at December 31, 2011	$	812,809
Provision for additional losses		140,394
Charge-offs		(138,911	)
Balance at September 30, 2012	$	814,292

The total impaired loans, which are loans that are in the foreclosure process or are declared to be in default, were approximately $944,000 and $1,563,000 at September 30, 2012 and December 31, 2011, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance for mortgage loans. These loans are currently recorded on a non-accrual basis.

The Company recently established a formal policy in which it will declare a loan to be in default whereupon the loan will be placed on non-accrual status when the following thresholds have been met: (i) the borrower has missed three consecutive mortgage payments; (ii) the borrower has not communicated to the Company any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments; (iii) lines of communication to the borrower have broken down such that any reasonable prospect of rehabilitating the loan and return of regular payments is gone.

The Company recently established a policy in which it will accept payments received on non-accrual loans as well as a policy for resuming accrual of interest on loans that have been placed on non-accrual status. These policies are as follows: (i) The Company will accept payments on loans that are currently on non-accrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation. (ii) A letter outlining the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the Senior Pastor and all board members of the borrower. This letter resumes the obligation to make payments on non-accrual loans. (iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from non-accrual status.

The Company recently established the following policy for determining when an uncollectable loan or trade receivable is charged off. When a loan is declared in default by its policy or deemed to be doubtful of collection, the loan committee of the Advisor to the Company will direct the staff to charge-off the uncollectable receivables.

Loans totaling approximately $2,208,000 and $3,137,000 exceeded 90 days past due but continued to accrue interest as of September 30, 2012 and December 31, 2011, respectively. The Company believes that continued interest accruals are appropriate because the loans are well secured, not deemed to be in default and the Company is actively pursuing collection of past due payments.

Real Estate Held for Sale

The Company records real estate held for sale at the estimated fair value, which is net of the expected expenses related to the sale of the real estate. The Company maintains continuous efforts to dispose of real estate held for sale at market terms, including purchase price and financing terms. The Company may allow for temporary occupancy of real estate held for sale. Revenues, including temporary rental payments, and expenses, such as taxes and insurance, arising from real estate held for sale are recorded on the Statement of Operations in the current period.

Carrying Value of Long-Lived Assets

The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that the carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of the estimated useful life.

Recoverability is assessed based on the carrying amount of the asset compared to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An allowance for losses is recognized when the carrying amount is deemed not recoverable and exceeds fair value as determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values, and third party independent appraisals.

Revenue Recognition

Interest income on mortgage loans receivable and the bond portfolio is recognized as earned. Other income included with interest represents cash received for loan origination fees, which are recognized over the life of the loan as an adjustment to the yield on the loan.

Deferred Financing Costs

The Company defers the costs related to obtaining financing, principally through the issuance of Secured Investor Certificates. These costs are amortized over the life of the financing using the straight line method, which approximates the effective interest method.

Income Per Common Share

No adjustments were made to income for the purpose of calculating earnings per share, as there were no potential dilutive shares outstanding.

Reclassifications

Certain accounts in the prior year financial statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements. These reclassifications had no effect on net income (loss).

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Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current Assets
Current allowance for current maturities of mortgage loans recievable	$ 60,356	$ 22,381
Current deferred origination fees for current mortgage loans recievable	76,832	26,687
Allowance for mortgage loans recievable	753,936	790,428
Deferred origination fees for mortgage loans recievable	487,537	508,693
Accumulated amortization for deferred offering costs	$ 912,765	$ 822,664
Stockholders' Equity
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, Authorized	30,000,000	30,000,000
Common Stock, Issued	1,703,098	1,778,411
Common Stock, Outstanding	1,703,098	1,778,411

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Mortgage Loans Receivable and Bond Portfolio (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Mortgage Lonas and Bond Portfolio Maturity Schedule

	Mortgage Loans	Bond Portfolio
October 1, 2012 through September 30, 2013	$     2,294,712	$    1,134,000
October 1, 2013 through December 31, 2013	417,206	262,000
2014	1,755,704	676,000
2015	934,075	146,000
2016	1,042,144	122,500
Thereafter	24,515,235	8,594,982
	30,959,076	10,935,482
Less loan loss and bond loss allowances	(814,292)	(2,000,000)
Less deferred origination income	(564,369)	______-__
Totals	$29,580,415	$ 8,935,482

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Document and Entity Information (USD $)	9 Months Ended
	Sep. 30, 2012	Nov. 14, 2012
Document And Entity Information
Entity Registrant Name	American Church Mortgage Company
Entity Central Index Key	0000934543
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 1,763,548
Entity Common Stock, Shares Outstanding		1,763,548
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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Secured Investor Certificates (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Secured Investor Certificates Maturity Schedule

October 1, 2012 through September 30, 2013	$	1,587,000
October 1, 2013 through December 31, 2013		271,000
2014		1,876,000
2015		2,568,000
2016		3,146,000
Thereafter		17,110,000
Totals	$	26,558,000

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Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
Interest and Other Income	$ 777,699	$ 803,856	$ 2,329,385	$ 2,423,237
Interest Expense	482,956	463,320	1,418,291	1,377,281
Net Interest Income	294,743	340,536	911,094	1,045,956
Provision for losses on mortgage loans receivable	(69,832)	55,955	140,394	142,899
Provision for losses on bonds	500,000		1,000,000	100,000
Provision for Losses on Mortgage Loans Receivable and Bonds	430,168	55,955	1,140,394	242,899
Net Interest (Loss) Income after Allowance for Mortgage and Bond Losses	(135,425)	284,581	(229,300)	803,057
Operating expenses	151,949	221,667	555,315	600,058
Operating (Loss) Income	(287,374)	62,914	(784,615)	202,999
Other Income	380	10,855	1,479	11,896
Net (loss) Income	$ (286,994)	$ 73,769	$ (783,136)	$ 214,895
Basic and Diluted (Loss) Income Per Share	$ (0.16)	$ 0.04	$ (0.44)	$ 0.11
Dividends Declared Per Share	$ 0.10	$ 0.09	$ 0.25	$ 0.29
Weighted Average Common Shares Outstanding - Basic and Diluted	1,749,509	1,908,999	1,763,182	1,930,523

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Transactions With Affiliates

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Transactions With Affiliates

6. TRANSACTIONS WITH AFFILIATES

The Company has an Advisory Agreement with Church Loan Advisors, Inc. (the “Advisor”). The Advisor is responsible for the day-to-day operations of the Company and provides office space and administrative services. The Advisor and the Company are related through common ownership and common management. A majority of the independent board members approve the advisory agreement on an annual basis. The Company paid the Advisor management and origination fees of approximately $153,000 and $101,000 during the three months ended September 30, 2012 and 2011, respectively, and $350,000 and $320,000 during the nine months ended September 30, 2012 and 2011, respectively.

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Stock Exchange And Repurchase Programs

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Stock Exchange And Repurchase Programs

5. STOCK EXCHANGE AND REPURCHASE PROGRAMS

The Company commenced a stock exchange program effective February 2, 2010 whereby it offered to shareholders on an ongoing basis (until terminated or modified by the Board of Directors) an exchange of one $1,000 principal amount Series C secured investor certificate for 200 shares of common stock of the Company, and, with respect to odd-lot holders above 200 shares converted into certificates, the sum of $5.00 cash for each remaining share. This exchange ratio was determined by management and approved by the Board of Directors, and was established as a basis for the completion of the exchange offer. This ratio was not intended to represent the amount at which the Company or any other party would be expected to purchase common stock in an arm’s-length transaction. The Company’s Board of Directors approved up to 1,000,000 shares to be repurchased. As of September 30, 2012, requests representing approximately 532,743 shares have been submitted for share exchanges. The Company did not exchange any shares during the three or nine months ended September 30, 2012. The Company exchanged 528,974 shares during the year ended December 31, 2011 for 2,586 Series C certificates ($2,586,000 in principal amount) and paid $76,870 in cash for remainder shares. The program was terminated by the Board of Directors on April 12, 2012 since the Company terminated the Series C secured investor certificate offering. (See Note 4).

The Company commenced a share repurchase plan on July 19, 2011 whereby it offers to shareholders on an ongoing, first-come, first-served basis (until terminated or modified by the Board of Directors) the repurchase of an aggregate of up to 250,000 shares of common stock at $4.00 per share. Shares may be purchased at the sole discretion of the Company, subject to the funds available after meeting Company obligations. Shareholders must present for repurchase either: (i) a minimum of 500 Shares, or (ii) the total number of Shares registered in such Shareholder’s name. The Company repurchased 75,313 shares for $301,252 during the nine months ended September 30, 2012. As of December 31, 2011, the Company had repurchased an aggregate of 160,927 shares for $643,229 in cash under the program. The Program may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders.

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Fair Value Measurements - Change in Fair Value of Bond Portfolio (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Notes to Financial Statements
Gross Bond portfolio	$ 9,996,923
Bond Purchases	40,000
Allowances for losses	(1,000,000)
Bond Proceeds	(101,441)
Gross Bond portfolio	$ 8,935,482

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Fair Value Of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Carrying Amount & Fair Value Financial Instruments

	September 30, 2012				December 31, 2011
		Carrying		Fair		Carrying		Fair
		Amount		Value		Amount		Value
Cash and equivalents	$	196,486	$	196,486	$	611,911	$	611,911
Accounts receivable		177,765		177,765		133,683		133,683
Interest receivable		140,449		140,449		135,990		135,990
Mortgage loans receivable		30,959,076		39,809,789		29,870,023		36,100,291
Bond portfolio		8,935,482		8,935,482		10,996,923		10,996,923
Secured investor certificates		26,558,000		30,017,000		25,542,000		30,374,749

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Allowance For Credit Losses

Balance at December 31, 2011	$	812,809
Provision for additional losses		140,394
Charge-offs		(138,911	)
Balance at September 30, 2012	$	814,292

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Fair Value Of Financial Instruments

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Fair Value Of Financial Instruments

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company is required to disclose the fair value information about financial instruments, where it is practicable to estimate that value. Because assumptions used in these valuation techniques are inherently subjective in nature, the estimated fair values cannot always be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument.

The fair value estimates presented herein are based on relevant information available to management as of September 30, 2012 and December 31, 2011, respectively. Management is not aware of any factors that would significantly affect these estimated fair value amounts. As these reporting requirements exclude certain financial instruments and all non-financial instruments, the aggregate fair value amounts presented herein do not represent management’s estimate of the underlying value of the Company.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are as follows:

	September 30, 2012				December 31, 2011
		Carrying		Fair		Carrying		Fair
		Amount		Value		Amount		Value
Cash and equivalents	$	196,486	$	196,486	$	611,911	$	611,911
Accounts receivable		177,765		177,765		133,683		133,683
Interest receivable		140,449		140,449		135,990		135,990
Mortgage loans receivable		30,959,076		39,809,789		29,870,023		36,100,291
Bond portfolio		8,935,482		8,935,482		10,996,923		10,996,923
Secured investor certificates		26,558,000		30,017,000		25,542,000		30,374,749

The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value:

Cash and equivalents

Due to their short-term nature, the carrying amount of cash and cash equivalents approximates fair value.

Accounts receivable

The carrying amount of accounts receivable approximates fair value.

Interest receivable

The carrying amount of interest receivable approximates fair value.

Mortgage loans receivable

The fair value of the mortgage loans receivable is currently more than the carrying value as the portfolio is currently yielding a higher rate than similar mortgages with similar terms for borrowers with similar credit quality. The credit markets in which we conduct business have experienced a decrease in interest rates resulting in the fair value of the mortgage loans increasing during the three or nine months ended September 30, 2012 and 2011, respectively.

Bond portfolio

We determine the fair value of the bond portfolio shown in the table above by comparing with similar instruments in inactive markets. The analysis reflects the contractual terms of the bonds, which are callable at par by the issuer at any time, and the anticipated cash flows of the bonds and uses observable and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for valuation.

Secured investor certificates

The fair value of the secured investor certificates is currently greater than the carrying value due to higher interest rates than current market rates.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions for interim statements and, therefore, do not include all information and disclosures necessary for fair presentation of results of operations, financial position, and changes in cash flow in conformity with generally accepted accounting principles. However, in the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for fair presentation of financial position, results of operations, and cash flows for the period presented.

The unaudited financial statements of the Company should be read in conjunction with the December 31, 2011 audited financial statements included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2011. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Nature of Business

Nature of Business

American Church Mortgage Company, a Minnesota corporation, was incorporated on May 27, 1994. The Company was organized to engage primarily in the business of making mortgage loans to churches and other nonprofit religious organizations throughout the United States, on terms established for individual organizations.

Accounting Estimates

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The most sensitive estimates relate to the realizability of the mortgage loans receivable, the valuation of the bond portfolio and real estate held for sale. It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any, may be material to the financial statements.

Concentration of Credit Risk

Concentration of Credit Risk

The Company's loans have been granted to churches and other non-profit religious organizations. The ability of the Company’s debtors to honor their contracts is dependent on member contributions and the involvement in the church or organization of its senior pastor.

Cash and Equivalents

Cash and Equivalents

The Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.

The Company maintains accounts primarily at two financial institutions. At times throughout the year, the Company’s cash and equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation. Cash in money market funds is not federally insured. The Company had approximately $3,000 and $0 in money market fund accounts at September 30, 2012 and December 31, 2011, respectively. The Company has not experienced any losses in such accounts.

Bond Portfolio

Bond Portfolio

The Company accounts for the bond portfolio under the Accounting Standards Codification (ASC) 320 Investments-Debt and Equity Securities. The Company classifies the bond portfolio as “available-for-sale” and measures the portfolio at fair value. While the bonds are generally held until contractual maturity, the Company classifies them as available-for-sale as the bonds may be used to repay secured investor certificates or provide additional liquidity or working capital in the short term. The Company has classified $1,135,000 and $873,000 in bonds as current assets as of September 30, 2012 and December 31, 2011, respectively, based on management’s estimates for liquidity requirements and contractual maturities of certain bonds maturing in 2012 and 2011, respectively.

Allowance for Mortgage Loans Receivable

Allowance for Mortgage Loans Receivable

The Company records mortgage loans receivable at estimated net realizable value, which is the unpaid principal balances of the mortgage loans receivable, less the allowance for mortgage loans. The Company’s loan loss policy provides an allowance for estimated uncollectible loans based on an evaluation of the current status of the loan portfolio. This policy reserves for principal amounts outstanding on a particular loan if cumulative interruptions occur in the normal payment schedule of a loan; therefore, the Company recognizes a provision for losses and an allowance for the outstanding principal amount of a loan in the Company’s portfolio if the amount is in doubt of collection. Additionally, no additional interest income is recognized on impaired loans that are declared to be in default and are in the foreclosure process. At September 30, 2012, the Company reserved $814,292 for fourteen mortgage loans, of which seven are three or more mortgage payments in arrears. At December 31, 2011, the Company reserved $812,809 for fifteen mortgage loans, of which eight were three or more mortgage payments in arrears. One of the loans was in the foreclosure process.

A summary of transactions in the allowance for credit losses for the nine months ended September 30, 2012 is as follows:

Balance at December 31, 2011	$	812,809
Provision for additional losses		140,394
Charge-offs		(138,911	)
Balance at September 30, 2012	$	814,292

The total impaired loans, which are loans that are in the foreclosure process or are declared to be in default, were approximately $944,000 and $1,563,000 at September 30, 2012 and December 31, 2011, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance for mortgage loans. These loans are currently recorded on a non-accrual basis.

The Company recently established a formal policy in which it will declare a loan to be in default whereupon the loan will be placed on non-accrual status when the following thresholds have been met: (i) the borrower has missed three consecutive mortgage payments; (ii) the borrower has not communicated to the Company any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments; (iii) lines of communication to the borrower have broken down such that any reasonable prospect of rehabilitating the loan and return of regular payments is gone.

The Company recently established a policy in which it will accept payments received on non-accrual loans as well as a policy for resuming accrual of interest on loans that have been placed on non-accrual status. These policies are as follows: (i) The Company will accept payments on loans that are currently on non-accrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation. (ii) A letter outlining the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the Senior Pastor and all board members of the borrower. This letter resumes the obligation to make payments on non-accrual loans. (iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from non-accrual status.

The Company recently established the following policy for determining when an uncollectable loan or trade receivable is charged off. When a loan is declared in default by its policy or deemed to be doubtful of collection, the loan committee of the Advisor to the Company will direct the staff to charge-off the uncollectable receivables.

Loans totaling approximately $2,208,000 and $3,137,000 exceeded 90 days past due but continued to accrue interest as of September 30, 2012 and December 31, 2011, respectively. The Company believes that continued interest accruals are appropriate because the loans are well secured, not deemed to be in default and the Company is actively pursuing collection of past due payments.

Real Estate Held for Sale

Real Estate Held for Sale

The Company records real estate held for sale at the estimated fair value, which is net of the expected expenses related to the sale of the real estate. The Company maintains continuous efforts to dispose of real estate held for sale at market terms, including purchase price and financing terms. The Company may allow for temporary occupancy of real estate held for sale. Revenues, including temporary rental payments, and expenses, such as taxes and insurance, arising from real estate held for sale are recorded on the Statement of Operations in the current period.

Carrying Value of Long-Lived Assets

Carrying Value of Long-Lived Assets

The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that the carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of the estimated useful life.

Recoverability is assessed based on the carrying amount of the asset compared to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An allowance for losses is recognized when the carrying amount is deemed not recoverable and exceeds fair value as determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values, and third party independent appraisals.

Revenue Recognition

Revenue Recognition

Interest income on mortgage loans receivable and the bond portfolio is recognized as earned. Other income included with interest represents cash received for loan origination fees, which are recognized over the life of the loan as an adjustment to the yield on the loan.

Deferred Financing Costs

Deferred Financing Costs

The Company defers the costs related to obtaining financing, principally through the issuance of Secured Investor Certificates. These costs are amortized over the life of the financing using the straight line method, which approximates the effective interest method.

Income Per Common Share

Income Per Common Share

No adjustments were made to income for the purpose of calculating earnings per share, as there were no potential dilutive shares outstanding.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurement Bond Portfolio

				Fair Value Measurement
September 30, 2012		Fair Value		Level 3
Bond portfolio	$	8,935,482	$	8,935,482

				Fair Value Measurement
December 31, 2011		Fair Value		Level 3
Bond portfolio	$	9,996,923	$	9,996,923

Change in Fair Value of Bond Portfolio

		Bond Portfolio
Balance at December 31, 2011	$	9,996,923
Purchases		40,000
Allowances for losses		(1,000,000	)
Proceeds		(101,441	)
Balance at September 30, 2012	$	8,935,482

Impaired Loans and Real Estate Held For Sale

	September 30, 2012
	Level 1		Level 2		Level 3		Fair Value at September 30, 2012
Impaired Loans	$	—	$	—	$	592,577	$	592,577
Real estate held for resale		—		713,497		—		713,497
	$	—	$	713,497	$	592,577	$	1,306,074

	December 31, 2011
	Level 1		Level 2		Level 3		Fair Value at December 31, 2011
Impaired Loans	$	—	$	—	$	1,188,050	$	1,188,050
Real estate held for resale		—		714,322		—		714,322
	$	—	$	714,322	$	1,188,050	$	1,902,372

Fair Value Measurement period increase decrease

		Fair Value Measurement Level 3			Fair Value Measurement Level 2
		Impaired Loans			Real Estate Held for Sale
Balance at December 31, 2011	$	1,188,050		$	714,322
Additions/Acquisitions		—			379,355
Dispositions/Proceeds		(384,576	)		(380,180	)
Provision for other than temporary losses		(210,897	)		—
Balance at September 30, 2012	$	592,577		$	713,497

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Summary of Significant Accounting Policies (Details Narrative) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
Money Market Balances	$ 3,000	$ 0
Bond Portfolio	1,135,000	873,000
Loan Loss Reserves	814,292	812,809
Impaired Loans	944,000	1,563,000
Loans Exceeding 90 Days Overdue	$ 2,208,000	$ 3,137,000

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Fair Value Measurements (Details Narrative) (USD $)	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Additional Provision for Loan Losses	$ 236,039	$ 142,899

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Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows from Operating Activities
Net (loss) income	$ (783,136)	$ 214,895
Impairment on real estate held for sale		57,820
Provision for losses on mortgage loans receivable	140,394	142,899
Provision for losses on bonds	1,000,000	100,000
Amortization of loan origination discounts	(25,761)	(15,425)
Amortization of deferred costs	90,101	87,791
Accounts receivable	(44,082)	(26,430)
Interest receivable	(4,459)	4,278
Prepaid expenses	(5,706)	(4,320)
Accounts payable	4,201	222,675
Management fee payable	32,840	(22,357)
Net cash provided by operating activities	404,392	761,826
Orgination of mortgage loans	(1,574,019)	(40,922)
Proceeds from origination fees		14,700
Collections of mortgage loans	474,890	896,567
Investment in bonds	(40,000)	(31,046)
Proceeds from bonds	101,441	54,543
Net cash provided by investing activities	(1,037,688)	893,842
Cash Flows from Financing Activities
Payments on line of credit, net		(616,000)
Proceeds from secured investor certificates	1,250,000	925,000
Payments on secured investor certificate maturities	(234,000)	(189,000)
Payments for deferred costs	(71,954)	(87,541)
Stock exchanges and redemptions	(301,252)	(442,482)
Dividends paid	(425,003)	(621,185)
Net cash provided by (used for) financing activities	217,791	(1,031,208)
Net Increase in Cash and Equivalents	(415,505)	624,460
Cash and Equivalents - Beginning of Period	611,991	350,339
Cash and Equivalents - End of Period	$ 194,486	$ 974,799

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Secured Investor Certificates

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Secured Investor Certificates

4. SECURED INVESTOR CERTIFICATES

Secured investor certificates are collateralized by certain mortgage loans receivable or secured church bonds of approximately the same value as the certificates. The weighted average interest rate on the certificates was 6.65% at September 30, 2012 and December 31, 2011, respectively. Holders of the secured investor certificates may renew certificates at the current rates and terms upon maturity at the Company’s discretion. Renewals upon maturity are considered neither proceeds from nor issuance of secured investor certificates. Renewals totaled approximately $308,000 and $676,000 for the nine months ended September 30, 2012 and 2011, respectively. The secured investor certificates have certain financial and non-financial covenants indentified in the respective series’ trust indentures.

The estimated maturity schedule for the secured investor certificates at September 30, 2012 is as follows:

October 1, 2012 through September 30, 2013	$     1,587,000
October 1, 2013 through December 31, 2013	271,000
2014	1,876,000
2015	2,568,000
2016	3,146,000
Thereafter	17,110,000
Totals	$26,558,000

In October 2008, the Company filed a registration statement with the Securities and Exchange Commission to offer $20,000,000 worth of Series C secured investor certificates. The offering was declared effective by the SEC on March 30, 2009 and was amended in January 2010 and again in June 2011. The offering concluded March 30, 2012. The certificates were offered in multiples of $1,000 with interest rates ranging from 4.50% to 7.25%, subject to changing market rates, and maturities from 4 to 7 and 13 to 20 years. The certificates are collateralized by certain mortgage loans receivable and church bonds of approximately the same value. At September 30, 2012, approximately 7,932 Series C certificates had been issued and were outstanding for $7,932,000, of which 2,586 Series C certificates were issued through its stock repurchase program (see Note 5).

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Mortgage Loans Receivable and Bond Portfolio - Mortgage Loans and Bond Portfolio Maturity Schedule (Details) (USD $)	Sep. 30, 2012
Mortgage Loans
October 1, 2012 through September 30, 2013	$ 2,294,712
October 1, 2012 through December 31, 2013	417,206
2014	1,755,704
2015	934,075
2016	1,042,144
Thereafter	24,515,235
Subtotal	30,959,076
Less loan loss and bond loss allowances	(814,292)
Less deferred origination income	(564,369)
Totals	29,580,415
Bond Portfolio
October 1, 2012 through September 30, 2013	1,134,000
October 1, 2012 through December 31, 2013	262,000
2014	676,000
2015	146,000
2016	122,500
Thereafter	8,594,982
Subtotal	10,935,482
Less loan loss and bond loss allowances	(2,000,000)
Less deferred origination income
Totals	$ 8,935,482

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Summary of Significant Accounting Policies - Allowance For Credit Losses (Details) (USD $)	9 Months Ended
	Sep. 30, 2011
Notes to Financial Statements
Balance at December 31, 2011	$ 812,809
Provision for additional losses	140,394
Charge-offs	(138,911)
Balance at September 30, 2012	$ 814,292